Drug Stores

Companies in this industry sell prescription drugs, over-the-counter medications, health and beauty products, and general merchandise from physical retail locations. Major companies include Walgreens, CVS Health, and Rite Aid (all based in the US), along with Rexall (part of Canada's Katz Group) and Shoppers Drug Mart (also from Canada), China Nepstar (China), AS Watson (Hong Kong), Matsumotokiyoshi (Japan), Phoenix and Celesio (Germany), and Alliance Boots (Switzerland).

Global pharmacy sales are expected to reach $1.2 trillion by 2018, according to Lucintel. Growth drivers include the aging of the population and increased health awareness.

The US drug stores industry includes about 45,000 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $235 billion.

COMPETITIVE LANDSCAPE

Demand is driven by the aging of the US population and advances in medical treatment. The profitability of individual companies depends on access to medical insurance groups. Large companies have economies of scale in purchasing and in access to large groups of customers. Small companies can compete effectively through convenient location or special merchandising. The US industry is concentrated: the 50 largest companies generate about 70 percent of revenue.

Chain stores account for about 50 percent of the US retail prescription market, according to IMS Health. Mail services account for about 25 percent, independent drug stores for 15 percent, and pharmacies at supermarkets for 10 percent.

Drug stores that also sell general merchandise compete with grocery stores, discount department stores, and other retailers....